With President Obama putting pressure on Congress to act quickly, the House of Representatives passed the “American Recovery and Reinvestment Tax Act of 2009” as a major component of its $800-billion-plus stimulus package. Last week the Senate added tax breaks while cutting spending provisions in an effort to garner enough Republican support to win the 60 votes needed yesterday to get over a procedural hurdle and bring its version to a vote today. Once the Senate bill passes, a House-Senate Conference Committee will work out the differences between the two bills, with a goal of having it on the president’s desk before Presidents’ Day.

The two packages have many parallel provisions, but they also have some big differences. Here's how they compare and contrast on tax breaks for individuals: 

AMT patch.  Probably the biggest contrast is the one-year AMT patch with an estimated cost of about $70 billion. Only the Senate bill includes the one-year AMT “patch,” without which millions more people will be hit with the dreaded alternative minimum tax for 2009.

Homebuyer credit. Here’s another big difference between the two versions. The House bill removes the repayment requirement for the up-to-$7,500 refundable first-time homebuyer credit, unless the home is resold within 36 months of purchase. This would apply for homes bought after Dec. 31, 2008, and before July 1, 2009. The Senate, by contrast, would provide a one time 10% tax credit (up to $15,000) on the purchase of a principal residence (it wouldn’t have to be a first-time purchase). The Senate credit isn’t refundable, and isn’t recaptured as long as the home is owned for at least 24 months. To make the Senate credit worth more to lower-income taxpayers who couldn’t take full advantage of a $15,000 credit on their tax returns, the homebuyer could elect to take half the credit in each of two years.

Breaks for new car buyers. Only the Senate bill creates an above-the-line deduction for interest paid on car loans and for state and excise sales taxes on the purchase of new cars and light trucks. The deduction applies to interest on a debt up to $49,500, incurred after Nov. 12, 2008, and before Jan. 1, 2010, to acquire the vehicle. The sales tax deduction also would apply only to taxes paid on up to $49,500 of a vehicle’s cost. The amount of taxes qualifying for the deduction would phase out between AGI of $125,000 and $135,000 for singles, and $250,000 and $260,000 on a joint return.

New credit for workers. Both bills contain a new refundable tax credit of up to $500 for working individuals and $1,000 for working families, which starts to phase out at income levels (AGI) above $75,000 ($150,000 for joint filers). The credit, which would apply for 2009 and 2010 only, could be claimed as a reduced amount of income tax wage withholding, or through a credit on a tax return.

Economic recovery payments. While not technically a tax provision, only the Senate bill has a one-time payment of $300 for retirees, disabled individuals, Social Security beneficiaries, SSI recipients, and veterans receiving veterans’ disability compensation and pension benefits.

Expanded earned income tax credit. Both bills provide an expanded EITC that would temporarily increase the EITC to 45% of the family's first $12,570 of earned income for families with three or more children. It also makes the credit generally available at somewhat higher income levels.

Expanded child tax credit. Both bills increase the eligibility for the refundable child tax credit in 2009 and 2010, but they contain some different threshold levels.

New education tax credit. Both bills expand the HOPE education tax credit for 2009 and 2010, making it available for four years at a rate of up to $2,500 of the cost of tuition and related expenses per year (100% of the first $2,000 of expenses and 25% of the next $2,000). The credit would phase-out starting at AGI over $80,000 ($160,000 for joint filers). The House bill makes 40% of the credit refundable, the Senate only 30%.

Computers as an education expense. The Senate bill, but not the House bill, allows computer technology and equipment to qualify as an education expense that can be paid from a Code Sec. 529 plan for 2009 and 2010.

Unemployment compensation exclusion. Only the Senate bill provides a temporary suspension of federal income tax on the first $2,400 of unemployment benefits received in 2009.

Transportation fringe benefits. Only the Senate bill increases the maximum monthly exclusion for employer-provided transit and vanpool benefits (currently $120) to the same level as the exclusion for employer-provided parking (currently $230).

Both the House and Senate bills also contain numerous energy and business tax incentives.